answer 4 - not go very low. At a price of $7, the quantity...

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4. Suppose the government imposed a minimum price of Price Quantity Demanded Quantity Suppplied $1.00 500 100 $2.00 400 120 $3.00 350 150 $4.00 320 200 $5.00 300 300 $6.00 275 410 $7.00 260 500 $8.00 230 650 $9.00 200 800 $10.00 150 975 Solution: When the Government imposes a minimum price of $7, it is a price floor. A price floor is the lowest legal price a good or a commodity can be sold at. In this case, the price floor is in favor of the suppliers so that the price do
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Unformatted text preview: not go very low. At a price of $7, the quantity demanded is 230 whereas the quantity supplied is 500. In this case, at a price of $7, the quantity demanded is much lower than the quantity supplied. As a result, there will be extra supply and surplus of goods available. $ 7 What would occur?...
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This note was uploaded on 08/04/2011 for the course ECN 601 taught by Professor Professor during the Spring '10 term at Grand Canyon.

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